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'New' GM Leaner and Meaner, but Not by Much

Automaker Still Has More Brands Than It Can Effectively Market

DETROIT (AdAge.com) -- General Motors Co. doesn't appear to be learning from its mistakes: The trimmed-down, "new" GM still looks a lot like the old one, with too many vehicle brands and too many overlapping U.S. models.

Several models under each of GM's brands are butting heads with similar models at sibling brands, including Chevy's new Traverse crossover SUV (middle).
Between now and 2011, GM will launch an astounding 25 models, according to CEO Fritz Henderson: 10 for Chevrolet, five for Cadillac and 10 for Buick-GMC. What's more, the automaker sees itself as making good on its promise to become leaner and meaner by reducing the total number of models it sells by the end of 2010 from 48 to 34 -- still a stunning figure, considering the lumbering giant's inability to carve out a real identity for each with product and create marketing that truly sets them apart.

"The problem isn't that 34 is too many models; it's the number of distinctive models," said Maryann Keller, an auto consultant who has authored two books on the company. "It just feels like the same old GM." She noted that several models under each of GM's brands are butting heads with similar models at sibling brands. For example, the new Chevrolet Traverse is up against its sibling at Buick, the Enclave, and GMC's Acadia. "The problem is they overlap and compete for the same buyer."

GM did shed four of its eight brands, leaving behind Hummer, Pontiac, Saab and Saturn, but even so, the automaker does not have enough time or money to transform the remaining quartet into distinctive brands. And Susan Jacobs, president of Jacobs & Associates, said even four is too many. She, along with two other experts queried by Ad Age, maintains that the automaker should operate with just two: Chevrolet as its mass-market marque and Cadillac its luxury marque.

The automaker declined to comment.

Competitors have a leg up
Ms. Jacobs said GM failed to take a valuable lesson from its main competitors, which each have just two car brands. She cited Toyota and Lexus; Honda and Acura; and Nissan and Infiniti. Because GM did not trim further, it is giving a leg up to competitors who will be able to react quicker to the market because they only have two brands, she said. Moreover, GM would have been able to maximize its shrinking ad budget with just two brands. The company spent more than $424 million in U.S. measured media during the first quarter of 2009, according to TNS Media Intelligence.

"GM's strategy looks very much like the strategy it used in boom markets," said Ms. Jacobs, who sees GM's revival plan under design-guru-turned-CMO Bob Lutz as focused on cool-looking new products and new kinds of marketing. That approach won't work in the current economic climate since consumers will buy new vehicles based on functionality and affordability but won't pay a premium for styling.

Ms. Jacobs said she isn't optimistic that struggling Buick can survive long-term, given that GM couldn't revive the brand during peak industry years. The 104-year-old brand has struggled since the '80s from the Oldsmobile syndrome: Its loyal buyers have aged and died and the brand has struggled to attract younger ones to replace them. Strategic Vision pegged Buick as the brand with the industry's oldest buyers, with a median age of 68. Buick sold 137,197 units in 2008, down 25% from 2007, and 54,322 units in the first seven months of this year, a 33% falloff from the same period a year ago, according to Automotive News.

Under Mr. Lutz as product guru, GM has vastly improved Buick's styling in recent years and has managed to win over buyers in their 50s with the Enclave crossover. Still, the brand's ad messages have flip-flopped every year or two during this decade under changing leadership, confusing consumers and further muddying its image.

Mr. Lutz assumed control of overall marketing last month and vowed to boost ad budgets. He is in the process of tweaking messages for the four brands. While he declined to discuss spending specifics, he said a new ad campaign, due to break in the fourth quarter, will challenge misconceptions about the carmaker's vehicles and how they compare to rivals. Mr. Henderson said GM will also shift more resources online to reach and attract younger consumers. He also vowed to put more of GM's communications resources to its four core vehicle brands instead of the GM brand, because "we don't go to market as GM."

Focus should be vehicle brands
Auto experts agreed the carmaker should quit talking about the tainted GM brand and get on with the business of promoting its vehicle brands. "They shouldn't even identify themselves as GM. People don't buy GM cars; they buy Cadillacs and Chevys, and that's what they ought to be talking about," Ms. Keller said.

"It seems like they are going back to their old ways," said George Peterson, president of AutoPacific.

GM still has too many mouths to feed with advertising and product development and should not focus on GM as some huge super-brand, Mr. Peterson said. He said GMC's all-truck lineup "pretty much parallels" Chevrolet's truck portfolio, which is why he would have preferred to see GMC killed. He said he's "saddened by the company's announcement last week to beef up Buick's lineup," since it appears that brand will absorb models intended for Pontiac, which is being eliminated, and Saturn, which is being sold.

Mr. Peterson said the Malibu, launched in fall 2007 and backed in 2008 with well over $100 million in advertising, was the cornerstone of Chevrolet's marketing, but GM hasn't advertised the midsize car in nearly a year. Meantime, GM crows about sales of its "red-hot" modern Camaro, but the car is backed by only a smidge of advertising online and in auto-buff books.

That could be a missed opportunity, since the new Camaro is a model that could lift interest in the entire Chevrolet brand. U.S. buyers pushed sales of the car to 7,113 units in July, Mr. Peterson said. It outsold all of Buick (7,099 units) and Cadillac (6,171).